Add Laurence Tribe To The Pro-Coin Group

Along with Philip Diehl, former Director of the United States Mint, the most authoritative voice to speak so far on the legality and viability of the Platinum Coin Option is Laurence Tribe, nearly universally recognized to be America’s greatest living Constitutional scholar.

And, like Diehl, Tribe says that the PCO is perfectly legal and viable as a means to deal with Republican hostage-taking on the debt ceiling.

He first said so back in July of 2011, during the first Republican hostage-taking:

Here is another option: the Treasury could mint coins to cover all the nation’s spending commitments. As Jack Balkin has pointed out, 31 U.S.C. § 5112(k) authorizes the Treasury to mint platinum coins in any denomination. Balkin suggests that the President could exercise this authority to mint a couple of trillion-dollar coins. By doing so, the President could put an end to the problem created when the Treasury’s revenues are insufficient to meet its spending commitments, without violating any existing federal law. If we accept Balkin’s interpretation of the relevant statutory provision, the central premise of Professor Buchanan’s argument—that default is guaranteed to occur under extant statutes come August 3—isn’t even true to begin with.

Of course, raising the debt ceiling might be a wiser move from a policy standpoint than simply printing more money or issuing new forms of currency. But this is not a constitutional distinction on which Professor Buchanan is entitled to rely in order to pronounce the debt ceiling unconstitutional, while leaving the ceiling on outstanding currency notes—and other elements of our revenue-raising arrangements—intact.

I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins. First, the statute itself doesn’t set any limit on coin value. Second, other clauses of 31 USC §5112 do set such limits, but §5112(k)—dealing with platinum coins—does not. So expressio unius strengthens the inference that there isn’t any limit here.

Of course, Congress probably didn’t have trillion-dollar coins in mind, but there’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective “mind” just can’t control the meaning of a law this clear.

It’s also quite clear that the minting of such a coin couldn’t be challenged; I don’t see who would have standing.

Bottom line: This is a situation where the political and economic considerations, not the legal considerations, have to drive the decision-making about this option. It’s certainly a lot better from just about every perspective than having the nation stuck on either horn of the very real dilemma you outlined below, which I agree offers no plausible way out as long as enough leaders in Congress insist on playing Russian Roulette with our economy and risking our full faith and credit by using the debt ceiling as a bargaining chip as they are threatening to do.

There are still some rabid dead-enders out there who are willing to discount what the former head of the Mint and the greatest living Constitutional scholar have to say on this issue, but their voices are getting ever more shrieky as they find their numbers shrinking.

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5 Responses to “Add Laurence Tribe To The Pro-Coin Group”

Phoenix Womansaid

Neil Irwin of Wonkblog has a post that expresses my feelings fairly accurately:

But ultimately, the platinum coin is an idiotic solution to an idiotic problem. Congress has given the Treasury a series of mutually exclusive instructions. If Congress can’t pass a debt ceiling increase, the choices that Obama and the Treasury face will all be bad ones. Is suspending Social Security checks or payments to military contractors a more appropriate step than exploiting the platinum coin loophole? Both would have real consequences as well, either for seniors trying to scratch by or for government contractors trying to make payroll (not to mention more credit rating downgrades for the United States).

There seem to be two kinds of objections. One is that it would be undignified. Here’s how to think about that: we have a situation in which a terrorist may be about to walk into a crowded room and threaten to blow up a bomb he’s holding. It turns out, however, that the Secret Service has figured out a way to disarm this maniac — a way that for some reason will require that the Secretary of the Treasury briefly wear a clown suit. (My fictional plotting skills have let me down, but there has to be some way to work this in). And the response of the nervous Nellies is, “My god, we can’t dress the secretary up as a clown!” Even when it will make him a hero who saves the day?

I’m hesitant to mock the monetary gods. When things get going in a particular direction with regards to money, it can take a very, very long time to reverse them. The modern inflation panic that Krugman rightly derides would have no power but for the fact that so many people lost money on bonds in the late 1970s. Even though I did not get burned at that time, the knowledge of what did happen affects my decision making and makes me much less likely to buy bonds thirty some years later. And I know that I am not alone in this.

That’s why I am not sure that the platinum coin is a good solution. Yes, it will put the congressional Republicans in their place and prevent the US from defaulting. But what other effects will it have? Krugman mentions the MMTers who think that we should unshackle ourselves from the idea of money-as-a-store-of-value entirely. They could end up with the upper hand, and I think they would wreck capitalism. Yes, haha, feature, not bug, but I could see the intervening period of financial wreckage being painful.

MarkHsaid

Hey, it might’ve been appropriate to dress Sec. Geithner in a clown suit, but we would never do that to any future Treas. Sec. Just wouldn’t be prudent to start down that road as nobody would take the job knowing all the duties. But, we could of course ask their shoe size…just in case.

Usually we just leave clownish activities to members of Congress. They have tons of practice with Kabuki and other silly things.